December 2, 2014
Alexander Graham Bell once said, "When one door closes, another opens." That certainly rings true for Jelli, which initially started as a listener-driven radio programming platform before morphing into an ad server for radio spots. CEO/Co-Founder Michael Dougherty, who oversaw the transformation, no sees big things on the horizon not just for Jelli, but for participating radio stations as they venture in the increasingly digital world. Here's how he sees Jelli and radio working together now and in the future.
Why did you decide to start Jelli?
Before Jelli, I spent about 12 years primarily in emerging technology, digital media and mobile work at Microsoft and technology startups. The reason we started Jelli was our love of radio. It's such a massive medium that's a part of our culture and fabric. We also saw that radio, over the past few decades, didn't focus on technological innovation. We felt we could bring that type of innovation to the market and help radio keep pace with broader technological advancements.
In a sense, Jelli, with its listener-driven programming, was one of the first social radio outlets.
When we started, we had an idea to combine the reach of broadcasting with the engagement of social media through the web and mobile. Doing that 1+1=3 combination would create a highly loyal and engaged community who would provide the participation to shape what they wanted to hear on-air. It was a very good combination. Remember, the initial concept was launched at a time when MySpace was the lead social network, Facebook was just on the rise and Twitter just started. The first versions of iPhone and Android came out early in the cycle, but we saw what was about to happen technologically.
So why didn't it work out in the end?
It was a combination of things. The first reason ... we shifted because we had an opportunity to use the platform in a new way, to handle advertising. When that occurred, we saw a bigger opportunity for us with an advertiser focus because we could realize a bigger, very true scale. We accomplished that with an advertising platform, but it ended up requiring all of our focus. We had to divert resources from the social radio platform. The budget for that became uncertain because our goals weren't perfectly aligned with the PDs, who thought about their own communities, while we felt that every year, radio economies became more social. We had to look at the world as a multi-channel experience to make our platform more relevant. In the end, we had to drop the social radio platform entirely.
So when did you officially make the move to Jelli becoming an advertising platform?
We had an opportunity at the end of 2011 to participate in a tech summit, where we presented what we were doing with our social radio platform. One of the largest radio advertisers in the country thought it was intriguing but also asked if they could use our platform as an ad server for radio spots. They were having a lot of problems finding out exactly when their ads ran on-air and what feedback they got. When we realized how big a need this was, their request became something we took seriously, so in 2012, we launched a prototype of the ad platform called RadioSpot(tm) - and we haven't looked back. In 2013, the beta officially rolled out and we brought more than 400 radio stations onto the platform and we had a 200% year-to-year growth, which was sort of in context with the broader aspect of programmatic buying.
You certainly seemed to get it up and running in no time flat...
It was a combination of our existing social radio platform and the new ad platforms. We used similar technology to play music on-air, because we were serving that up in real time based on audience feedback. We just took the existing innovation of our music platform and created an ad server around it to help us get spots to market faster.
Another aspect was the fact that the radio industry hadn't changed much in how they delivered spots in the past decade. That created a pent-up demand by advertisers for a more advanced platform, which we created to service our own clients. We were primed to move into that category because the demand was there for this type of capability. The buyers helped get the Jelli advertising platform adopted.
Just how does it work?
It's really pretty simple. We work with local stations to install the Jelli appliance for their radio spots on our advertiser server. We send out servers to the stations and hook them up to the station's local traffic and automation systems. Once that happens, the local stations can set up generic commercial breaks in the Jelli system to be placeholders, so when the times comes for certain commercials, Jelli finds the spots that have been cached on the ad servers and makes real-time decisions to run them on-air triggered by the generic placeholders.
When such an ad plays on-air, it also creates a log in the system, which is transmitted to the dashboard of the advertisers. They know in real time exactly when the ad is running, be it in Boston or Buffalo. Jelli can track the entire campaign in real time, and the advertisers find a lot of value in that.
How do you gauge success - by the number of stations using Jelli or by the advertising revenue your platform generates?
We look at it in a few different ways. One is the footprint for our platform that is created by 400 stations across the U.S. That's a pretty good start, but we'd like to reach thousands of stations at some point. Second is the total audience reach. We currently reach about 60 million people a week with our platform. We work with some great stations that have massive scale in their markets. The last thing is to get more adoption from advertisers. We need advertisers to be relevant on our platform, and from that perspective, the growing number of agencies and campaigns overall increase the number of impressions brought by buyers.
Are you as yet concerned about your platforms contributing to on-air clutter?
Not yet. We're trying to help deliver national advertisements on the radio in a better way. We're still growing; we now have a small percentage of all national advertising. From the local radio station standpoint, they can strategize how many ads they run per hour as part of their programming strategy. They could decide to potentially reduce the number of spots, which would increase the value of the ones they do play.
We do believe that national advertisers are not just for big radio stations; they should always be a part of the mix for local radio because it's the best medium for national advertisers to reach consumers when they're driving around, deciding what store to go to. We believe that by transforming how we deliver advertising on stations, we can provide value to all the parties. Even if stations decide to reduce their ads by a couple minutes an hour, it's not going to impact how we look.
Can Jelli do anything to overcome the lingering belief among some in radio that the ROI in digital isn't worthwhile?
One of our missions when we started this company was that we have always been big fans of the concept of breaking down barriers between channels. One thing is our belief that a radio station should be more than its FM broadcast. Rather it should offer a combination of content across various platforms. It's a multi-channel world because the audience has already moved to other platforms. We want to access radio and ad content on whatever device they have.
Of course, FM is still a very important part of radio. It's a huge part, but just one of many channels from the advertisers' perspective. Radio is in a very competitive media environment with digital, display, search, mobile, Facebook and all these other channels that take attention away from radio advertisers, consumers and listeners who look at the world as a multi-channel experience. They're already there and we believe radio needs to embrace them. That's the right approach, and we've seen that happen with the biggest groups and we're seeing it happen on the local level.
So what's in the cards for the future of Jelli and radio in general?
You don't have to look that far ahead to see the next step, which is kind of exciting for radio. There are a few things on the horizon and we want Jelli to be a catalyst in bringing money back into radio. One way we'll do that is through programmatic advertising. Essentially there are advertisers out there who would rather use our platforms to buy and place ads versus working through the traditional sales process.
Automated platforms have grown rapidly in the past three years. A year ago, programmatic buying for all media accounted for $3 billion to $4 billion; this year it'll be $10 billion. The reason why programmatic is building this buzz outside of radio is that $10 billion is a big number compared to the entire radio revenue of $16 billion in the U.S. Right now, radio gets 0% of that $10 billion. In the next 24 months, that $10 billion is expected to grow to $20 billion.
We want to provide the tech platform to tap into those programmatic budgets to bring a fair share back into radio. Advertisers who spend money on programmatic platforms still want ROI, and they want to reach consumers who are in their cars and out and about, so it would be very valuable to get radio plugged into programmatic. We're trying to solve that challenge. In the next two years, we want to get radio its fair piece of that market by getting 3% to 4% of that funneled into radio.
To do that, we have to remind people about the power of radio. We have to be relevant in an era when agencies are thinking about digital more and more. Even TV is having a hard time keeping pace. Radio is very powerful and a key part of the buyer's media mix. We have to continue to educate the market on how relevant we really are.